Correlation Between Guidepath Tactical and Emerging Markets

Can any of the company-specific risk be diversified away by investing in both Guidepath Tactical and Emerging Markets at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Guidepath Tactical and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guidepath Tactical Allocation and The Emerging Markets, you can compare the effects of market volatilities on Guidepath Tactical and Emerging Markets and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Guidepath Tactical with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidepath Tactical and Emerging Markets.

Diversification Opportunities for Guidepath Tactical and Emerging Markets

0.96

Correlation Coefficient

Guidepath Tactical  Emerging Markets

Almost no diversification

The 3 months correlation between Guidepath and Emerging is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Guidepath Tactical Allocation and The Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets and Guidepath Tactical is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Guidepath Tactical Allocation are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets has no effect on the direction of Guidepath Tactical i.e., Guidepath Tactical and Emerging Markets go up and down completely randomly.

Pair Corralation between Guidepath Tactical and Emerging Markets

Assuming the 90 days horizon Guidepath Tactical is expected to generate 1.74 times less return on investment than Emerging Markets. But when comparing it to its historical volatility, Guidepath Tactical Allocation is 1.21 times less risky than Emerging Markets. It trades about 0.22 of its potential returns per unit of risk. The Emerging Markets is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  1,858  in The Emerging Markets on April 27, 2025 and sell it today you would earn a total of  271.00  from holding The Emerging Markets or generate 14.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Guidepath Tactical Allocation  vs.  The Emerging Markets

Guidepath Tactical

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Guidepath Tactical Allocation are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Guidepath Tactical may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Emerging Markets

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Emerging Markets are ranked lower than 25 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Emerging Markets showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guidepath Tactical and Emerging Markets

The main advantage of trading using opposite Guidepath Tactical and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidepath Tactical position performs unexpectedly, Emerging Markets can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Emerging Markets will offset losses from the drop in Emerging Markets' long position.

The idea behind Guidepath Tactical Allocation and The Emerging Markets pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.